merger-agreement

# Merger Agreement

Draft a signing-to-closing merger agreement reflecting agreed structure, economics, and risk allocation.

## Prerequisites

1. **Parties and structure** — legal names, formation jurisdictions, surviving entity, merger type.
2. **Consideration** — cash/stock mix, exchange ratio, earnout/contingent terms, escrow/holdback.
3. **Capitalization** — cap tables, equity awards, convertibles, appraisal rights applicability.
4. **Diligence inputs** — financials, material contracts, IP, litigation, regulatory items.
5. **Regulatory/tax plan** — antitrust, securities, foreign investment review, tax treatment intent.
6. **Timeline and approvals** — board/stockholder approvals, outside date, conditions, financing.
7. **Ancillary docs** — voting agreements, support letters, employment/retention, escrow, registration rights.

## Output Structure

### 1) Document Skeleton

```text
MERGER AGREEMENT
- Parties; Effective Date; Recitals
1. Definitions
2. The Merger; Effective Time; Effects
3. Merger Consideration; Payment Mechanics
4. Treatment of Equity Awards
5. Representations and Warranties of the Company
6. Representations and Warranties of Parent/Merger Sub
7. Covenants (Pre-Closing; Post-Closing)
8. Conditions to Closing
9. Termination
10. Indemnification (or Remedies)
11. Miscellaneous
Signatures
Exhibits and Schedules
```

### 2) Workflow

1. **Confirm transaction map** — parties, merger steps, filings, closing sequence.
2. **Draft mechanics and economics** — effective time, consideration flow, equity conversion.
3. **Allocate risk** — reps, covenants, conditions, termination fees, indemnification.
4. **Add governance and post-close** — board/officers, employee matters, transitional covenants.
5. **Attach schedules/exhibits** — disclosure schedules, charter/bylaws, ancillary agreement forms.
6. **Quality pass** — defined terms, cross-references, closing deliverables, schedule conflicts.

### 3) Section Drafting Reference

| Section | Required Inputs | Drafting Notes |
|---|---|---|
| Preamble/Recitals | Parties, purpose, structure | Identify merger form and intended effective time |
| Definitions | Deal-specific terms | Define MAE, Knowledge, Permitted Liens, Material Contracts |
| Merger Mechanics | Surviving entity, filings | Specify filings and effect on charter/bylaws |
| Consideration | Price, exchange ratio | Cash/stock mix, payment mechanics, adjustment/earnout |
| Equity Treatment | Options/RSUs/convertibles | Vesting, cancellation, assumption (see matrix below) |
| Reps & Warranties | Diligence scope | Use schedules to qualify; set materiality/knowledge |
| Covenants | Interim operations | Ordinary course, no-shop/go-shop, access |
| Conditions | Regulatory, approvals | Mutual and party-specific conditions |
| Termination | Outside date, breaches | Fees, cure periods, fiduciary out |
| Indemnification | Survival, caps | Align with escrow/holdback; exclusive remedy |
| Tax | Transaction intent | State intended treatment only if confirmed |
| Miscellaneous | Governing law, notices | Specific performance, assignment limits |

### 4) Equity Treatment Matrix

| Security | Treatment at Effective Time | Notes |
|---|---|---|
| Common Stock | Convert into merger consideration at closing | Address fractional shares |
| Preferred Stock | Convert per liquidation preference or negotiated ratio | Confirm approval thresholds |
| Options | Cancel for spread or assume/convert | Specify exercise/withholding |
| RSUs/PSUs | Vest, cancel, or assume per award terms | Address performance targets |
| Warrants/Convertibles | Convert or terminate per instrument | Require consents if needed |

### 5) Closing Deliverables

- Officer certificates and bring-down
- Secretary certificates, good standing, charter/bylaws
- Third-party consents and payoff letters
- Legal opinions (if required)
- Escrow agreement and funding confirmations
- FIRPTA and tax certifications (if applicable)
- Stockholder approval documentation

### 6) Schedules and Exhibits

| Label | Purpose |
|---|---|
| Disclosure Schedules | R&W exceptions, numbered to match sections |
| Articles/Certificate of Merger | Formation filing form |
| Escrow Agreement | Holdback terms and release mechanics |
| Voting/Support Agreement | Stockholder commitments |
| Registration Rights Agreement | If stock consideration |
| Employment/Retention Agreements | Key employee terms |

## Guidelines

- Match merger procedure to formation jurisdictions and charter requirements.
- Align consideration mechanics with financing, escrow, and payment workflows.
- Use disclosure schedules to qualify reps; avoid silent qualifiers in the main text.
- Define MAE and Knowledge with clear carve-outs and standards.
- Track no-shop/go-shop, fiduciary out, and matching rights with precision.
- Include antitrust and other regulatory approval and timing obligations.
- Treat tax-free reorganization language as conditional unless confirmed.
- Confirm appraisal/dissenters' rights applicability and process.
- Keep defined terms consistent; avoid duplicated or conflicting provisions.
- Non-compete enforceability varies by state; tailor scope to local law if included.